1. In order to encourage industrialization in certain areas of the country, the Federal Government from time to time has been granting exemptions from customs duty and sales tax. One such incentive was contained in SRO 484(I)/92 dated 14.05.1992. Under this notification, plant and machinery, not manufactured locally, imported for setting up a new unit or for expansion or balancing, modernization and replacement of an already existing unit in certain areas was granted exemption from the whole of the customs duty and sales tax subject to fulfilling certain conditions.
2. The respondent company, a cement manufacturing enterprise, imported three Caterpillar Off-Highway dump trucks, which were shipped to Karachi port through S.S. ‘Chitral’. Letter of Credit for the import of such trucks was opened on 27.2.1995 and the Bill of Entry was filed on 29.6.1995 i.e. well before the arrival of the ship. Upon arrival of the ship on 16.7.1995, benefit of total exemption from customs duty and sales tax was sought under Notification No. SRO 484(I)/92 dated 14.05.1992, but the same was denied to the respondent company for two reasons. Firstly it was maintained that the exemption was applicable only to such imports that arrived at the port on or before 30.06.1995 whereas in the present case the ship carrying the Off-Highway dump trucks arrived on 16.7.1995. The other reason for denying benefit of exemption was that the Off-Highway dump truck being mobile vehicle, cannot be termed as a plant hence does not fall within the ambit of SRO 484(I)/92. The customs authority thus assessed the consignment on the basis of PCT Heading that is applicable to dump trucks and imposed 30% Ad Volerum duty as well as the applicable rate of sales tax and other charges.
3. Having being denied the benefit of exemption under SRO 484(I)/92 dated 14.05.1992, the respondent company challenged the assessment of the customs authority in the Lahore High Court and on the basis of an interim order obtained release of the consignment upon furnishing personal bonds of its directors. The Lahore High Court then relegated the respondent company to contest the matter before the forum provided under the Customs Act. All the three forums upto the Customs and Sales Tax Appellate Tribunal held that the exemption cannot be availed on Off-Highway dump trucks on the ground that the same being vehicles cannot be termed as ‘plant’. The respondent company challenged the decision of the Tribunal before the High Court of Sindh in Special Customs Appeal No. 142/2002. The High Court after framing the question of law “Whether Dump Trucks imported by the appellant fall within the purview of plant and machinery as contemplated in SRO-484(I)/92 dated 14.5.1992”, vide impugned judgment dated 1.1.2003 answered it in the affirmative. Being aggrieved by such decision, the appellant filed CPLA No. 256-K/2003 before this Court giving rise to the present appeal.
4. Mr. Raja Muhammad Iqbal, learned counsel for the appellant, argued that Off-Highway dump trucks imported by the respondent company being mobile vehicles, fall under PCT Heading 8704.1090 and do not fall under any entry listed in PCT Heading 84 and 85, which lists the items of machinery, appliances and equipments, therefore not being part of the plant of respondents’ factory it was not entitled to claim exemption under SRO 484(I)/92 dated 14.05.1992. He next submitted that the power to classify any item for customs tariff lies exclusively with the government and as the Off-Highway dump truck is separately classified in PCT headings and not included in the items of machinery listed in SRO 484(I)/92, the same does not fall within the ambit of plant. In support of this contention he relied upon the case of Big Mak Foods Ltd Vs. Deputy Collector of Customs (1994 SCMR 537). He next argued that in the present case the Bill of Entry was filed on 29.6.1995 at the time when the ship carrying the consignment in question had not even arrived. The ship arrived on 16.7.1995 and at that time the benefit of exemption granted under SRO 484(I)/92 was no longer available as by that time the period of exemption had already expired. He submitted that in terms of the first proviso to Section 30 of the Customs Act where Bill of Entry is filed in advance of the arrival of the conveyance, the applicable rate of duty would be such that was chargeable on the date the manifest of the conveyance is delivered, which in the present case was 16.07.1995. Therefore, he maintained that the filing of Bill of Entry before the cut-off date i.e. 30.06.1995 would not bring any benefit for the respondent company under SRO No. 484(I)/92. In support of this argument, the learned counsel for the appellant relied upon the case of Fauji Cement Company Limited Vs. Federation of Pakistan (2014 SCMR 994). He also relied upon the cases of Pakistan Telecommunication Corporation Vs. Federation of Pakistan (2011 PTD 2175) and Collector of Customs Vs. Ismail & Co (2015 SCMR 1383).
5. In rebuttal, Mr. Salman Akram Raja, learned counsel for the respondent company, argued that by definition an industrial plant comprises of equipments, machines and apparatus that are applied in an industrial process to produce a desired result and respondent company’s industrial process of cement manufacturing starts from the quarrying of the limestone. He explained that the Off-Highway dump trucks are meant for transporting the quarried limestone to the place where it is further processed, thus being an integral part of industrial process entitled the respondent company to avail the benefit of exemption granted under SRO 484(I)/92 dated 14.05.1992. In support of his argument that even a moving vehicle can be described as part of a ‘plant’, Mr. Salman Akram Raja placed reliance upon the case of Collector of Customs Vs. Fauji Fertilizer Co. Ltd (PLD 2005 Supreme Court 577) and also on a judgment from English jurisdiction rendered way back in the year 1887 and reported as Yarmouth Vs. France (1887 LIR. 19 Q.B.D. 647). In this case, the plaintiff was an employee of a wharfinger. He brought an action against his employer under the Employers’ Liability Act, 1880 after being injured by the employer’s horse that pulled the trolley on which the plaintiff used to deliver consignments on the instructions of his employer. The plaintiff for his injury claimed compensation in the suit. The defendant resisted the action on the ground that neither the plaintiff was a ‘workman’ nor the horse a ‘plant’ within the meaning of the Employers’ Liability Act, 1880’ therefore, the claim was not maintainable. The Divisional Court, while affirming the decision of the Trial Court, held that the horse which drove the trolley was the most material part of the assignment of the plaintiff and hence can be described as ‘plant’. Mr. Salman Akram Raja maintained that if a horse can be described as a ‘plant’ then by analogy the moving vehicle Off-Highway dump trucks engaged in an industrial process can also be described as a ‘plant’ and the exemption under SRO 484(I)/92 can be sought on their import for use in a cement factory.
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